No, really. Something that occurs nearly every year will occur again Januray 1, 2019, and everybody at the margin knows it’s going to happen and will probably just shrug.
But here is the headline as it appeared in the Ideas Lab section of the Milwaukee Journal Sentinel on Wednesday October 24, 2018. Social Security Taxes may go up
Doesn’t that sound like your social security taxes could go up…that everyone’s social security taxes could go up? Tied with the conversations from Senate Majority Leader Mitch McConnell about solving the federal deficit on the backs of the social net programs, like Social Security, it sounds like we’ll be paying more across the board. Well it’s not true, as I’ll show below. (and why they put this in the Idea Labs editorial section instead of the business section is beyond me…fortunately the majority of their readership skips the Ideas Lab but that’s another story)
And then their parent paper, USA Today, also published their own version, under the title: Here’s why your Social Security taxes might go up on 2019. Here’s the link! This version was published on line on Tuesday October 23, 2018.
Now, this article was written by Dan Caplinger. I am not sure if the USA Today/MJS version was written exclusively by Mr. Caplinger for their use or if USA Today compressed it beyond recognition. The USA Today version is more complete and explanatory…but still leaves the scare in the message if the reader isn’t versed in Social Security.
Well, The Motley Fool published their own version of Dan Caplinger’s story just this morning. And they couldn’t resist scaring the populace either. Their article is titled: Bad News: Your 2019 Social Security Taxes Could Rise $279 — or More and can be found here.
Now…the fact of the matter is…very few of us will see a change in what we pay to Social Security in 2019 when compared to 2018. The tax rate of 6.2% isn’t changing. So all is good with our world.
Those seeing a change…and there are 10+ million Americans in this situation…are those who make over $128,400 a year. That was the income cap in 2018 where you and your employer stopped paying Social Security taxes. In 2019 that cap increases to $132,900. So if you make over $128,400 in 2019, your taxes will go up…because you will be paying 6.2% of the amount between $128,400 and your annual earnings or $132,900 whichever is lower. If you have been making six figures in this range for a while, you won’t be surprised.
So why the scare tactics? Why the scary headings? Are the media that desperate for readers that they are resorting to this? Those affected are already aware…the rest of us don’t need any additional reasons to worry about Social Security. Shame on the media.
Now…it is this very cap that many of us have suggested be removed…so high wage earners would continue to contribute from dollar one to dollar omega…and improve the solvency of Social Security in the long run. A change the majority of us will never notice…and the rest will barely miss.
The summation from the Motley Fool:
It’s typical for the Social Security wage base to rise each year, and the bulk of taxpayers don’t have to worry about its impact on Social Security payroll taxes. But for those in the upper end of the income spectrum, 2019’s larger tax increase is just the latest in a series of gradual yet significant hikes over time.
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